A buyer comparing Big Sky listings this fall can run the numbers once, check the comps, pencil out a cap rate, and reasonably assume the rest is paperwork. It isn't. Two separate approvals decide whether a Big Sky home can actually earn what the spreadsheet promises, and neither one shows up on the listing sheet or the county tax record.
The first approval comes from the state of Montana, which now taxes the same house differently depending on who sleeps in it and for how long. The second comes from whichever subdivision holds the deed, and a 2025 Montana Supreme Court ruling means that approval can quietly disappear years after closing, even when the county already said yes. Getting both answers before an offer goes in is the difference between a rental that works and one that stops working the moment someone reads the fine print.
What the State Now Charges Depends on Who Sleeps There
Montana lawmakers rewrote residential property taxation through House Bill 231 and Senate Bill 542 in the 2025 legislative session, and the full system took effect with 2026 tax bills. A home that serves as someone's primary residence, or a long-term rental leased in blocks of 28 days or more to a tenant who lives there at least seven months a year, now qualifies for a tiered "homestead" rate: 0.76% on the first $378,000 of market value, 0.90% on the next bracket up to $756,000, 1.10% up to roughly $1.51 million, and 1.90% above that. A home used as a second home, or rented short-term in stretches under 30 days, skips the tiers entirely and pays a flat 1.90% on the full assessed value from dollar one.
| Property type | Rate structure | Example on a $1.5M home |
|---|---|---|
| Primary residence or long-term rental (enrolled) | Tiered: 0.76% to 1.10% | Roughly $14,500/year |
| Second home or short-term rental | Flat 1.90% | Roughly $28,500/year |
That table uses the state's published brackets before any mill levy is layered on top, so it's a floor, not a final bill. Even as a floor, the gap nearly doubles the tax line in an investor's underwriting. It has nothing to do with which county the parcel sits in or which fire district covers it. It's a function of how the deed is used, not where it is.
The Deadline That Broke Its Own Portal
The lower rate isn't automatic. Owners have to enroll through the state's Homestead.MT.gov portal, and this year's rollout showed how many people miss that step. The 2026 application window ran from December 1, 2025 to March 1, 2026, and Governor Greg Gianforte's office had to extend the deadline to March 20 after a rush of last-minute filings overwhelmed the online system. More than 235,000 Montana homeowners had already claimed a related rebate the prior year and were expected to roll into the new classification automatically, and the state's portal still buckled under the volume in the final days.
The next window, covering 2027 taxes, opened May 4, 2026 and runs through March 1, 2027, which means it's open right now. A buyer closing on a Big Sky property intended as a primary residence or genuine long-term rental should file as soon as the deed records rather than waiting for the deadline crunch to repeat itself. The classification also doesn't travel automatically with a sale. If a seller carried the reduced rate, the buyer inherits it only through the end of that calendar year. Keeping it going into the next year requires the new owner to file their own application by that year's March 1 deadline. Only one property per owner can carry the primary-residence classification, and the enrollment form asks about ownership structure, so buyers planning to hold title through an LLC or trust should confirm eligibility before assuming the lower rate will apply to them.
The Second Approval Hiding in the Covenants
Clearing the tax question only gets a buyer to the first approval. The second comes from whichever subdivision governs the property, and it can be stricter than anything the county has on record. Big Sky is unincorporated, and the Big Sky Owners Association governs roughly 8,000 acres that stretch across both Gallatin and Madison counties. Its authority comes from covenants recorded decades ago, not a city ordinance, which means there's no single Big Sky rulebook a buyer can pull up and read once.
In 2019 the Montana legislature passed Senate Bill 300 to protect an owner's right to rent, barring HOAs from imposing new restrictions harsher than the rules in place when the buyer purchased. That protection looked settled until July 2025, when the Montana Supreme Court ruled in Brandt v. R&R Mountain Escapes LLC that older, general covenant language, the kind that simply bars "commercial activity" without ever naming short-term rentals, can still be read to prohibit them. The ruling didn't write a new rule. It reinterpreted an old one, which means SB 300's protection against fresh restrictions does nothing to stop a court from deciding an existing covenant already covered the case all along.
The association's own subdivisions show how granular this gets. Sweetgrass Hills amended its covenants in 2019 and passed a resolution letting owners who were already renting short-term continue, but only if they file an annual registration, pay a $100 fee, cap occupancy at two guests per bedroom plus two more, and skip on-street parking entirely. Other Big Sky communities, including Moonlight Basin and Spanish Peaks Mountain Club, set their own terms through their own recorded documents, and each one can differ from its neighbor.
Zoning adds a narrower layer underneath all of this. Gallatin County recognizes 22 separate zoning districts, and only two of them, Gallatin Canyon/Big Sky and Hebgen Lake, specifically address short-term rentals at all. A property can sit in one of those districts, hold a valid Montana Public Accommodation License, and still get blocked by its own subdivision's covenants, because the license itself doesn't transfer with a sale. Anyone buying a property that was previously rented has to reapply for that license under their own name. The seller's paperwork doesn't carry forward.
What to Check Before You Write an Offer
- Ask for the specific subdivision's recorded covenants and any HOA rental resolutions, not a general statement that short-term rentals are "allowed in the area."
- Confirm which Gallatin County zoning district the parcel sits in, since only Gallatin Canyon/Big Sky and Hebgen Lake govern short-term rentals directly.
- Verify the property's current tax classification with the Montana Department of Revenue rather than assuming a seller's homestead or long-term rental status carries forward.
- If the plan is long-term rental or primary residence, file for the reduced rate immediately after closing rather than waiting for the March 1 crunch.
- If title will sit in an LLC or trust, confirm eligibility for the reduced rate before finalizing that structure.
What Buyers Ask Once They've Read the Purchase Contract
If the seller already has the reduced tax rate, do I get it too? For the rest of that calendar year, yes. The reduced rate stays with the property regardless of who owns it. Keeping it into the following year requires the new owner to file a fresh application by that year's March 1 deadline. Nothing carries forward automatically past that point.
Does it matter whether my property is in Gallatin County or Madison County? Not for the tax classification, which is set by state law and applies the same tiered structure statewide. It can matter for the covenant question, since the Big Sky Owners Association's jurisdiction spans both counties but individual subdivisions still set their own rental rules through their own recorded documents.
If my subdivision allows short-term rentals today, can that change after I buy? It can, and not through a new HOA vote. The Brandt ruling shows a court can decide existing covenant language already prohibited short-term rentals, even if no one enforced it that way before the sale. Reading the actual covenant text, rather than asking whether rentals are "currently allowed," is the more reliable check.
Running both of these layers, the state tax classification and the subdivision's covenants, belongs in a Big Sky purchase alongside the inspection and the title work, not after. Brian Heck works these subdivisions closely enough to know which covenants to pull first and which zoning district actually governs a given parcel, and can help you get both answers before you're under contract.
